Advice
How to win big in the blooming homestay business?
18/06/2019 17:19 | Source: The Leader
Investing in homestay properties has emerged as a new trend in Vietnam. In order to maximize their profit in the long term, investors should take into account a number of factors.

In recent years, homestay and Airbnb models have proven their potential. Their market share has now been on the rise, taking the portion once belonged traditional hotels.

However, hotels have been less affected by online home-sharing platforms than expected. Especially in Vietnam, where hotel supply is not yet sufficient to cater to the increasing number of tourists at peak season, findings from JLL showed.

These platforms are not posing a serious threat, but traditional hotels should not underestimate Airbnb’s potential. Young generation in Vietnam is more comfortable with the sharing economy, evident in the incredible growth of Grab and Airbnb recently. 

Considerations when investing in homestay in Vietnam
A homestay in Sa Pa. In recent years, homestay properties has emerged as a new investment trend in Vietnam

This sharing economy trend has presented the market with new opportunities to invest in, no matter how much capital or asset investors possess.

Airbnb has grown quite significantly over the past few years, now supplying over 16,000 accommodation units for the Vietnam market, data from Grant Thornton’s Hotel Survey 2017 report showed.

Meanwhile, homestay properties are usually located in well-known tourism hubs like Hanoi, HCMC, Sa Pa, Nha Trang, and Da Lat. This business model offers much larger spaces through a wide range of accommodations including entire villas, houses, apartments and bungalows, which can lodge a larger number of guests than rooms in traditional hotels.

The development of this alternative model has served as a catalyst for hotels to continue to innovate and improve their products and services to attract customers.

This type of short-term rental model starts out as a platform for people to rent out their unused space, anytime they want. Homeowners with spare rooms in their house can rack in considerable additional leisure income, even if they only rent out their property every weekend or so. 

The attractive income has inspired many investors in Vietnam to invest in buy-to-let, or take a long-term lease to rent the property back.
Nevertheless, lots of investors have found that the returns they make a month were not able to cover their mortgage or interests.

Therefore, there are a few things to get right before deciding to invest your capital and become a host.
First of all, location is key. If you are focusing on short-term rental services, just pick a property near tourist attraction areas or airports.

Additionally, how the property connected to nearby traffic and facilities like convenience stores or food courts is also a major thing to concer

Also, management should not be overlooked. Managing several listings at a time can be tiring, especially in case the investor is doing this apart from their day job. 

Oversight in management can lead to serious security problems, property and reputation damage. Hiring experienced staff is probably the best solutions for management issues, but quality human resource can fatten operation costs, which can easily eat up profits at the end of the day.

Besides, experience is also another matter to take on. Before listing the properties, think about what your home can offer guests compared to traditional hotels at the same price. 

Various homestay investors considers ‘local touch plus competitive price’ the golden formula for success. 

The majority of guests who choose homestays over hotels tend to expect certain taste of the local area in their rented property. Therefore, anything from ‘Ca phe sua da’ drip filter in the kitchen to ‘non la-shaped’ lamps can differentiate your property from competitors.

Finally, homestay investors must be aware of the business registration procedures necessary for this model to ensure sustainable and smooth business activities.